Direct Deposit Advance

[lpayton]

Well, at first I was told that I would not need to provide bank statements, because I needed $0 at closing (seller paying all closing costs).  I ended up needing to provide them anyway.  Fine.  So after a few days of my statements being in the hands of UW, I get a call from my LO asking me about direct deposit advances I use in my checking account (btw, I bank through Wells Fargo, and am applying for my mortgage through Wells too).  I explained to her that I use the advance like a line of credit, and re-pay it ALWAYS.  My credit cards are new, and have high interest rates, and charge crazy fees for cash advances, and they are really low limits...so it is more convenient and easier to just use the direct deposit advance.  She stated she uses her credit cards the same way (takes cash advances for her groceries, etc)...but said that UW is concerned that I have a "budgeting" issue.  I think this is ludicrous.  They verified a FOUR YEAR positive rental history a few days earlier with the property management company, and they are worried about this??? A service THEY PROVIDE THAT I ALWAYS pay back??? I am beside myself!!! If they deny my loan because of utilizing a service that they provide, I will be leaving Wells Fargo bank, for good. 

Another annoyance, is that this was Tuesday.  The LO stated that she would know by the end of the day, or early Wednesday the status of my loan.  Here it is Friday and no word yet.  The over-promise, under-deliver thing is getting a little annoying.  I am hoping maybe the UW just passed it on to her manager for final approval?

UGH.  At this point, I almost want to be denied so I can just MOVE ON WITH MY LIFE!!!!!!!!!!!!!!!!!!!!!!!

[lpayton]

Oh, also need to add that I make $52,000/year, and literally have NO debt! ZERO! (other than my brand new $200 limit credit cards) My debt to income ratio is SUPER low....and my mortgage will be $140 higher than my current rent...and after tax write-offs, my mortgage will actually be cheaper.  So, again, scratching my head over why this would be a problem. 

[Anonymous]

IF there is ONE thing I have learned from this whole mortgage endeavor ( and let me say this is not my first mortgage, I probably have gone through 4 mortgage processes in my life with my current mortgage and anytime I have refianced it), that the UW can do whatever they like!  You burp and it smells wrong they can flag it.  That might sound harsh but the first UW I had didn't like that at one time on my land's life there was a corn crop....not that there was presently a corn crop but there used to be a corn crop.  And she developed a cocka maney plan to go around what she "felt" about the corn crop. 

SO could this cause a problem, yup...but maybe with just this particular UW.  If everything else is great, you have chances of this not being an issue with other UW's.  Since you bank with Wells and want them to do the mortgage, I would make it clear what they stand to lose if this little deal holds you up. 

[lpayton]

Yes, underwriting does seem to have a mind of their own with regard to certain things. Just hoping they don't make a big fuss over this. Especially when everything else is perfect. Ugh. I'm SO sick of being on the fence and not having any control over my own future.

[Anonymous]

AMEN...and I feel your pain!

[Anonymous]

Sorry but this is not what you want to hear but I agree with the UW. Essentially you are using pay day loans. The way they look at it is you can not afford your current expenses on you income and therefore need a loan to make it paycheck to paycheck. Not to be harsh but maybe you should step back and rethink purchasing a home right now. If you can not make it from paycheck to paycheck without a loan living in a rental. What are you going to do when the furnace on your new home goes out or your water heater, etc? Unless purchasing the new home will make your mortgage payment less than your current rent and lower some other expense such as commuting costs or something; then I apoligize for my statement.

BTW taking cash advances on credit cards to purchase grocieries is NOT a good idea. using your credit card at the store to take advantage of a cash back deal or points deal then PIF at then end of the month can be smart BUT NO CASH ADVANCES. Cash advance on a credit card and Pay Day Loans just screams despiration.

[lpayton]

I have over $3,000 in savings, and almost NO DTI with a $52,000 a year salary.  I am not in a "desperate" situation, at all.  It is not a payday loan..Like I said, I use it as a line of supplemental credit, just like a credit card.  I get excellent points with my Wells Fargo debit card, and utilize it for that reason.  If I had known it was going to be an issue, I would have stopped using it a while back.  Just never thought I would be punished for utilizing a service that THEY offer.  And as far as your statement about "re-thinking" buying a house, maybe you should re-read the part about my outstanding 4 year long rental history.  I am not asking for advice regarding my ability to pay my potential mortgage here, simply wondering if the utilization of the DD Advance is a kiss of death in anyone else's personal experience.

Also, regarding your statement of using cash advances on credit cards, again, you need to re-read the post.  My loan officer stated that she used HER credit cards in that manner, not me. 

[DallasLoanGuy]

reason # 5,281 why you don't go to a direct bank for a mortgage......

you get the same rate and fees going thru a mortgage banker or mortgage banker that sells to wells fargo.

[SDChrgrboy2]

[i]I have over $3,000 in savings, and almost NO DTI with a $52,000 a year salary.  I am not in a "desperate" situation, at all.  It is not a payday loan..Like I said, I use it as a line of supplemental credit, just like a credit card.  I get excellent points with my Wells Fargo debit card, and utilize it for that reason.  If I had known it was going to be an issue, I would have stopped using it a while back.[/i]

I'm sorry, I agree with the previous poster, the direct deposit is not a line of credit and isn't advertised as one. Have you read the information on their website? Here are bits of it from there own website:

It is important to note the service is an expensive line of credit intended to assist with short-term borrowing needs and is not recommended as a solution for your long-term financial needs

Continuous Usage - If you have used the Direct Deposit Advance service for 6 or more consecutive statement periods, your advance credit limit may be reduced by $100 each statement period until your credit limit is zero ($0) for one statement period. The Advance Fee is a one-time transaction charge and is not dependent upon the length of time the advance is outstanding. For every $20 that is advanced, the Advance Fee is $1.50.

This is an expensive form of credit intended to meet short term and emergency borrowing needs.

Personal Line of Credit	13% APR	$3.79
Credit Card	20% APR, 4% Cash Advance Fee	$17.83
Direct Deposit Advance	Advance Fee: $1.50 per $20	$22.502

 It would be cheaper to use a credit card than the advance.

So every time you use it your paying well over 22% interest.  I know you say you want to earn points but the fees you are paying outweigh any points you are earning. And I am sorry but it is a payday loan. You are being advanced money ahead of your next direct deposit. Same process as a payday advance place. I have friends in several divisions of Wells including the home mortgage divivision, and we have actually discussed this.  The UW will look at this to see why you need to advance yourself money before you get paid. . It is called a direct deposit advance, not direct deposit line of credit.  Why dont you link your savings to your checking so the money is transferred automatically?

[Anonymous]

Sorry if I offended you. Maybe I am  not clear on what exactly a "direct deposit advance" on checking/savings account that is used for a LOC is. It appears the UW is not either and jumped to the same conclusion I did.

Only you can be the judge of your financial situation and I was simply responding to what i read "I use the direct deposit LOC because my credit cards have huge fees for cash advances" I guess this is not exactly what you meant.

Again sorry to offended. Good luck to you hope you get it all worked out.